HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO.,LTD

Transcription

1 HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO.,LTD 2017 Interim Report January to March 2017 April

2 Section I Important Notes The Board of Directors, Board of Supervisors, directors, supervisors and senior management of Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the Company ) hereby guarantee that the information presented in this report shall be together be wholly liable for the truthfulness, accuracy and completeness of its contents and free of any false records, misleading statements or material omissions. Chen ZongNian, the Company's Chairman, Jin Yan, the head of accounting (Accounting Officer) hereby declare and warrant that the financial statements in the Report are authentic, accurate and complete. Chen Zongnian, the Company s Chairman, directors of the Company including Hu Yangzhong, Wu weiqi, and independent directors of the Company, including Cheng Tianzong, Lu Jianzhong, Wang Zhidong, and Hong Tianfeng attended the Board Meeting to review this Annual Report. Gong Hongjia, the Company s vice chairman, did not attend the Board Meeting because of his trip oversea; Liu Xiang, the Company s director, did not attend the Board Meeting because of his business trip; the Company s chairman Chen Zongnian was authorized to attend the board meeting on behalf and exercise Mr. Gong and Mr. Liu s voting rights instead. 2

3 Section II Corporate Profile I. Key Accounting Data and Financial Indicators Whether the Company performed a retroactive adjustment to or restatement of accounting data due to changes of accounting policies and correction of accounting errors Yes No 2017 Q Q1 YoY Change (%) Operating income (RMB) 7,043,724, ,199,710, % Net profits attributable to shareholders of the Company (RMB) Net profits attributable to shareholders of the Company excluding non-recurring gains and losses (RMB) Net cash flows from operating activities (RMB) 1,480,816, ,143,615, % 1,440,574, ,133,528, % -3,034,652, ,432,111, % Basic earnings per share (RMB/share) % Diluted earnings per share (RMB/share) % Weighted average ROE (%) 5.91% 5.76% 0.15% By the End of March 31 st 2017 By the End of March 31 st 2016 YoY Change (%) Total assets (RMB) 42,657,819, ,339,007, % Net assets attributable to shareholders of the Company (RMB) 25,803,247, ,288,634, % Items and Amounts of Non-recurring Gains and Losses Applicable Inapplicable Unit:RMB Item January 1 st March 31 st 2017 Profit or loss from disposal of non-current assets (including the write-off for the impairment of assets) -115, The government subsidies included in the current profits and losses (excluding the government subsidy closely related to regular course of business of the Company and government subsidy based on standard quota or quantitative continuous application according to the state industrial policy.) Held-to-maturity financial assets, profits and losses of fair value held-for-trading financial liabilities, and investment income in disposal of held-for-trading financial assets and liabilities and available-for sale financial assets excluding the effective hedging business related to the 7,813, ,921,

4 regular business operation of the Company. Other non-operating income and expenditures except the items mentioned above 9,174, Less: Impact of income tax 7,169, The impact of the minority interests (after tax) 381, Total 40,242, Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the definition in the <Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public Non-recurring Gains and Losses>, or classifies any non-recurring gain/loss item mentioned in the aforementioned note as a recurrent gain/loss item Applicable Inapplicable In the reporting period, the Company did not classify an item as a non-recurring gain/loss according to the definition in the <Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public Non-recurring Gains and Losses>, or classifies any non-recurring gain/loss item mentioned in the aforementioned note as a recurrent gain/loss item II. Total Number of Shareholders at the end of the reporting period and Information for Top 10 Shareholders 1. Total number of common shareholders and preferred shareholders with resumed voting rights at the end of the reporting period and information about top 10 shareholders Total number of common Unit: Share shareholders at the end of the reporting period 72,835 Particulars about shares held by Top 10 shareholders Name of shareholder Nature of shareholder Share- holding percentage (%) Total shares held at the period-end Number of restricted shares held China Electronics Technology HIK Group Co., Ltd. State-owned corporation 39.57% 2,435,783,304 0 Gong Hongjia Foreign individual 16.16% 994,500, ,875,000 Xinjiang Weixun Investment Management Limited Partnership Domestic non-stateowned corporation 5.95% 366,480, ,155,000 Hong Kong Securities Clearing Company Ltd.(HKSCC) Foreign corporation 4.01% 247,095,

5 Xinjiang Pukang Investment Limited Partnership The 52nd Research Institute at China Electronics Technology Group Corporation Domestic non-stateowned corporation State-owned corporation 2.08% 128,231,250 96,173, % 120,516,696 0 UBS AG Foreign corporation 1.62% 99,703,534 0 Hu Yangzhong Domestic Individual 1.33% 81,857,651 61,419,988 GIC PRIVATE LIMITED Foreign corporation 0.80% 49,254,245 0 Citic Securities Co., Ltd. Domestic non-state-owned corporation 0.73% 45,150,498 0 Particulars about shares held by the Top 10 shareholders holding shares not subject to trading restriction(s) Name of shareholder Number of tradable shares held at the period-end Type Type of shares Number China Electronics Technology HIK Group Co., Ltd. 2,435,783,304 RMB ordinary shares 2,435,783,304 Gong Hongjia 248,625,000 RMB ordinary shares 248,625,000 Hong Kong Securities Clearing Company Ltd. (HKSCC) The 52nd Research Institute at China Electronics Technology Group Corporation 247,095,807 RMB ordinary shares 247,095, ,516,696 RMB ordinary shares 120,516,696 UBS AG 99,703,534 RMB ordinary shares 99,703,534 Xinjiang Weixun Investment Management Limited Partnership 74,325,584 RMB ordinary shares 74,325,584 GIC PRIVATE LIMITED 49,254,245 RMB ordinary shares 49,254,245 Citic Securities Co., Ltd. 45,150,498 RMB ordinary shares 45,150,498 Central Huijin Investment Ltd. 43,879,200 RMB ordinary shares 43,879,200 New China Life Insurance Company Ltd. individual share dividend payout - Shenzhen No. 018L-FH002 38,050,689 RMB ordinary shares 38,050,689 5

6 China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group Corporation are all subject to control of China Electronics Technology Group Corporation. Ms. Chen Chunmei, controlling shareholder of Xinjiang Explanation on associated Pukang Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares relationship or/and persons acting in in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership. concert among the above-mentioned Except for these, the Company does not know whether the other shareholders are related shareholders: parties and whether they are acting-in-concert parties in accordance with the Measures for Management of the Disclosure ( 上市公司股东持股变动信息披露管理办法 ) of the Shareholding changes of shareholders of the listed Company. Explanation on the Top 10 shareholders participating in the securities margin trading business (if any) No Any of the Company s top 10 common shareholders or top 10 non-restricted common shareholders conducts any agreed buy-back in the reporting period? Applicable Inapplicable No such cases in the reporting period. 2. Total number of preferred shareholders and information about Top 10 preferred shareholders Applicable Inapplicable 6

7 III. Significant Events 1. Information and explanation about variations in key financial statement items and financial indicators during the reporting period. 1.1 Explanation for variations in balance sheet items Item March 31 st 2017 (RMB) January 1 st 2017 (RMB) YoY change (%) Note of Significant change Other Current Asset 738,727, ,153,992, % Maturity of principal-guaranteed financial products Long-term equity investment 80,000, ,000, % Increase of investment in associated companies Construction in process Increase of investments in Tonglu Security Industrial Base Project Phase II & Internet 506,796, ,482, % Security Industry Base Short-term loans 2,587,109, ,291, % Increase of loan for temporary revolving capital Payroll Payable 321,750, ,084,529, % 2016 year-end bonus were distributed in the current quarter Dividends payable 11,709, ,105, % Dividends paid for the first unlocking of 2014 Share Incentive Scheme Non-current liabilities due within one year 0 15,340, % Balance decreased by bank loan expiring reimbursements Other payables 379,088, ,033,169, % 2016 Share Incentive Scheme was completed; capitals from granted employees were Capital reserves transferred to share capital and capital reserves, resulted in decrease of other payables, 1,701,969, ,045,440, % and increase of capital reserves. Other current liabilities 964,716, ,177, % 2016 Share Incentive Scheme was completed, resulted in increase of shares which are subject to trading restriction(s) Treasury stock 964,716, ,177, % 7

8 1.2 Explanation for variations in income statement items Hikvision 2017 Q1 Report Q (RMB) Q (RMB) YoY (%) Note of Significant change Operating Income 7,043,724, ,199,710, % Operating Income increased with the steady increase of market demands. operating costs 4,030,635, ,023,844, % Increase with the operating income growth Business Taxes and Levies 66,178, ,522, % Increase with the operating income growth Selling expenses Selling expenses increase with the Company s continuous increasing investments on 700,619, ,294, % domestic and overseas sales network The Company s increasing investments in R&D, in order to continuously enhance the Administrative expenses 747,817, ,661, % products competitiveness. Financial expense 21,619, ,047, % Increase in foreign currency exchange losses Impairment Losses of Assets Increase in A/R and Inventories resulted in increase in bed debt provisions and 59,401, ,456, % provisions for decline in value of inventories Gains from changes in fair values (Losses are indicated by "-") Investment income (Loss is indicated by "-") 4,304, ,978, % Fair value variations for foreign currency hedging products 26,616, ,185, % Increase in investment gains for principal-guaranteed financial products Non-operating Expenses 895, ,165, % Water conservancy construction fund suspended Income Tax Expenses 318,461, ,921, % Increase with the profit growth 1.2 Explanation for variations in cash flow statement items Q (RMB) Q (RMB) YoY (%) Note of Significant change Net Cash Flow from Operating Activities Net Cash Flow from Investment Activities Net Cash Flow from Financing Activities -3,034,652, ,432,111, % Payments for material procurements, tax payables, and increase in 2016 year-end bonus 3,054,283, ,472,218, % Maturity of principal-guaranteed financial products 2,324,978, ,010,293, % Increase of bank loans 8

9 2. Progress and influence of significant events, analysis and explanation of solutions. Applicable Inapplicable 3. Incomplete commitments of the Company s Actual Controller, Shareholders, related parties, and acquirer(s) during the reporting period. Commitments Giver of commitments Details of commitments Date of Term of commitments commitments Performance 1. Commitments in non-competition within the industry: In the period as controlling shareholders of the Hikvision, CETHIK and its controlling subsidiaries (excluding Hikvision and its subsidiaries, the same below) will not be engaged in such business that is competitive to Hikvision and its subsidiaries directly or indirectly. 2. Commitments in decrease and regulation of transactions with related party: Zhejiang Haikang Group Co., Ltd (hereinafter referred to as Haikang Group or actual controller) as the controlling shareholders of Hangzhou Hikvision Digital Technology Co., Ltd (hereinafter referred to as "Hikvision" or "Listed Company") are commited as below for the transactions with Hikvsion: Commitments in offering documents or CETHIK Group Co., Ltd. shareholding alterations (1) Haikang Group will not make use of the controlling power to offer more favorable conditions to Hikvision than those to any independent third party in any fair market transactions in the cooperation with Hikvision. (2) Haikang Group will not make use of the controlling power to obtain the prior right to complete the transaction with Hikvision. (3) Haikang Group will not deal with Hikvsion in not fair terms comparing to the market prices to prejudice the Company s interests. October 29 th, 2013 Long-term Strict performance For unavoidable related transactions, the Company will observe the principles of justice and fairness to deterimine prices according to the market on the basis of equality, voluntarily. The Company will obey the Articles of Association and other regulatory documents related to the avoiding of issues about related transactions. The related transactions will go through approval procedures in accordance with related rules and complete legal procedures, fulfilling the information disclosure obligations in respect to the related transactions 3. Commitment to the maintenance of the independence of the listed Company 3.1 Commitment to Personnel Independence of the listed Company (1) Commitment that our general manager, deputy general manager, chief financial officer, secretary of the board and other members of senior management shall not assume any positions other than 9

10 Commitments Giver of commitments Details of commitments Date of Term of commitments commitments Performance directors and supervisors or get any remuneration in CETHIK and/or any of its controlled entities; (2) Commitment in keeping the management of labor, human resources and issues related to remuneration of the listed Company independent from that of CETHIK; 3.2 Commitment to the independence of the asset of the listed Company (1) Commitment to independent and complete asset of the listed Company (2) Commitment free of unlawful use of cash and asset of the listed Company by the controlling shareholders 3.3 Commitment to financial independence of the listed Company (1) Commitment to an independent finance department with a team and accounting system; (2) Commitment to a regulated, independent accounting system and financial management system of the branches and subsidiaries (3) Commitment to maintaining accounts with banks independently of and not sharing any bank account with our controlling shareholders (4) Commitment that the financial staff shall not assume any positions in CETHIK (5) Commitment to paying taxes independently according to the law; (6) Commitment to implementing financial decisions independently 3.4 The Company has set up an independent organizational structure which maintains its independent operations which is independent from that of CETHIK. 3.5 Commitment to business Independence of the listed Company (1) The Company has the asset, personnel, aptitude and management capability for independent and complete business operation. The Company has the ability to operate independently in the market. (2) Commitment in independence in both business and operations 4. Regarding plans for the development and relevant commitment for the listed Company, Haikang Group has committed as below for the subsequent development of Hikvsion according to the Securities Acts and relevant laws and rules, 4.1 Currently the Company has no plan to change or make significant adjustments for principal business in the next 12 months; 4.2 Currently the Company has no plan to sell, merge or operate with another Company for the assets and business of the listed Company or its subsidiaries in the next 12 months. 4.3 Currently the Company has no plan to alter the Board of the Directors and senior management 10

11 Commitments Giver of commitments Details of commitments Date of Term of commitments commitments Performance and no agreement with other shareholders about the appointment and removal of the directors or senior management. The team of Board of Directors and senior management will remain unchanged for the foreseeable future. 4.4 Currently the Company has no plan to make significant changes to the Articles of Association for the listed Company. 4.5 Currently the Company has no plan to make significant changes to the existing employee recruitment for the listed Company. 4.6 Currently the Company has no plan to make significant changes for the dividend distribution plan for the listed Company. 4.7 Currently the Company has no plan to make significant changes for business and organizational structure for the listed Company. Hangzhou Weixun Investment Management Limited Partnership (later renamed as Xinjiang Weixun Investment Management Limited Partnership) Commitments During Hu Yangzhong, Wu Weiqi, JiangHaiqing, Zhou Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke s tenure of the Company s board of directors, supervisors and senior management personnel, the annual transfer of Hikvision s total shares should not exceed 25% of total number of shares held under Weixun; within 6 months after abovementioned personnel s dimission, should not transfer hikvision s shares held under Weixun. May 17 th, 2010 Long term Strict performance in Initial Public Offering or re-financing Hangzhou Pukang Investment During Hu Yangzhong, Wu Weiqi, Gong Hongjia s tenure of the Company s board of directors, Limited Partnership(later supervisors and senior management personne, the annual transfer of Hikvision s total shares should renamed as Xinjiang Pukang not exceed 25% of total number of shares held under Pukang; whithin 6 months after Investment Limited Partnership) abovementioned personnel s dimission, should not transfer hikvision s shares held under Pukang. May 17 th, 2010 Long term Strict performance The Company's directors, supervisors and executive: HuYangzhong,Wu Weiqi, Jiang Haiqing, Zhou Zhiping,Xu Lirong, Cai Dingguo, He Hongli, During their tenure of the Company s board of directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Weixun; whthin 6 months after their dimission, they should not transfer their shares held under Weixun. May 17 th, 2010 Long term Strict performance 11

12 Commitments Giver of commitments Details of commitments Date of Term of commitments commitments Performance Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke Directors, executive officers of the Company: Hu Yangzhong, Wu Weiqi During their tenure of the Company s board of directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Pukang; whthin 6 months after their dimission, they should not transfer their shares held under Pukang. May 17 th, 2010 Long term Strict performance During Gong Hongjia s tenure of the Company s board of directors, supervisors and senior The Company s director Gong Hongjia s spouse, Chen Chunmei management personnel, Chen s annual shares transfer should not exceed 25% of total number of shares held under Pukang; whthin 6 months after the dimission of Gong Hongjia,Chen should not transfer her shares held under Pukang. May 17 th, 2010 Long-term Strict performance China Electronics Technology Group Corporation To avoid any loss of the Company and other shareholders arising from any competing business, China Electronics Technology Group Corporation, the actual controller of the Company, issued Letters of non-competition on 18 September, September 18 th, 2008 Long term Strict performance Gong Hongjia; XinJiang WeiXun Investment Management Limited Partnership; XinJiang KangPu Investment Management Limited To avoid any loss of the Company and other shareholders arising from any competing business, Gong Hongjia, Hangzhou WeiXun Investment Management Limited Partnership, ZheJiang Orient Holdings Co., Ltd and Hangzhou KangPu Investment Management Limited Partnership, the July 10 th, promoters of the Company, issued Letters of non-competition on 10 July, Long term Strict performance Partnership;ZheJiang Orient Holdings Co., Ltd. Whether the undertaking is fulfilled in time Yes 12

13 4. Guidance on the Company s operational result from January 1 st 2017 to June 30 th 2017 Guidance on the Company s operational performance during January 1 st, 2017 to June 30 th, 2017: Net profits attributable to shareholders of the Company are positive, and situation of turning losses into gains is not applicable. Estimated YoY change (%) of net profits attributable to shareholders of the Company from January 1 st, 2017 to June 30 th, 2017 Estimated variation interval of net profits attributable to shareholders of the Company from January 1 St, 2017 to June 30 th, 2017 (0,000 RMB) Net profits attributable to shareholders of the Company from January 1 st, 2017 to June 30 th, 2017 (0,000 RMB) Note of change in operational results 15.00% to 35.00% 299, to 351, , The Company s operating performance continues to have a steady growth. 5. Financial Assets measured at fair value Applicable Inapplicable Unit: RMB Category Initial investment cost Profits or losses on the changes in fair value in this period Cumulative fair value change charged to equity Purchase during the reporting period Sales during the reporting period Cumulative investment income Closing balance Source of funds Derivative instruments 2,485,985, ,304, ,966, ,215, ,451,704, Company's own funds Total 2,485,985, ,304, ,966, ,215, ,451,704, Illegal provision of guarantees for external parties Applicable Inapplicable No such case in the reporting period. 13

14 7. The Company s funds used by the controlling shareholder or its related parties for non-operating purposes Applicable Inapplicable No such case in the reporting period. 8. Schedule for the reception of activities including research, communication and interviews during the report period Applicable Inapplicable 8.1 Reception of research activities. Time of reception Method of reception Type of reception object Basic situation of the research From January 3 rd, 2017 to January 20 th, 2017 Site Research Institutional and individual investors From February 6 th, 2017 to February 10 th, 2017 Site Research Institutional and individual investors From February 13 th, 2017 to February 24 th, 2017 Site Research Institutional and individual investors From February 27 th, 2017 to March 10 th, 2017 Site Research Institutional and individual investors CNINF, Investor Relations Activity Record: From January 3 rd, 2017 to January 20 th, 2017 CNINF, Investor Relations Activity Record: From February 6 th, 2017 to February 10 th, 2017 CNINF, Investor Relations Activity Record: From February 13 th, 2017 to February 24 th, 2017 CNINF, Investor Relations Activity Record: From February 27 th, 2017 to March 10 th,

15 8.2 Participation of conferences for investor relationship activities Hikvision 2017 Q1 Report Time of conference Location Conference Name Type of reception object Method of reception January 2017 Beijing Morgan Stanley China Technology, Media & Telecoms Conference Institutional and individual investors One-on-One, One-on-multi, small group Meetings, and etc. January 2017 Shanghai UBS Greater China Conference 2017 Institutional and individual investors One-on-One, One-on-multi, small group Meetings, and etc. January 2017 Beijing Deutsche Bank Access China Conference 2017 Institutional and individual investors One-on-One, One-on-multi, small group Meetings, and etc. February 2017 Hangzhou ZhongTai Securities 2017 Capital Market Summit Institutional and individual investors One-on-One, One-on-multi, small group Meetings, and etc. March 2017 Shanghai GuangFa Securities Innovation and Recovery Summit Institutional and individual investors One-on-One, One-on-multi, small group Meetings, and etc. March 2017 Taibei BoA Merrill Lynch 2017 Asia Pacific Telecom, Media & Technology Conference Institutional and individual investors One-on-One, One-on-multi, small group Meetings, and etc. 15

16 IV. Financial Reports 5.1 Financial Reports 1. Consolidated Balance Sheet Prepared by Hangzhou Hikvision Digital Technology Co., Ltd. March 31 st, 2017 Unit: RMB Item Closing balance Opening balance Current Assets: Cash and bank balances 16,208,936, ,634,993, Balances with clearing agencies Placements with banks and other financial institutions Financial assets at fair value through profit or loss 12,003, ,547, Derivative financial assets Notes receivable 3,360,649, ,843,404, Accounts receivable 12,046,663, ,242,812, Prepayments 325,551, ,971, Premiums receivable Amounts receivable under reinsurance contracts Reinsurer's share of insurance contract reserves Interests receivable Dividends receivable Other receivables 555,148, ,600, Financial assets purchased under resale agreements Inventories 4,422,171, ,825,159, Assets classified as held for sale Non-current assets due within one year Other current assets 738,727, ,153,992, Total Current Assets 37,669,852, ,523,481, Non-current Assets: 16

17 Loans and advances to customers Available-for-sale financial assets 283,836, ,836, Held-to-maturity investments Long-term receivables 187,671, ,588, Long-term equity investment 80,000, ,000, Investment properties Fixed assets 2,850,265, ,853,743, Construction in progress 506,796, ,482, Materials for construction of fixed assets Disposal of fixed assets Bearer biological assets Oil and gas assets Intangible assets 407,172, ,256, Development expenditures Goodwill 248,364, ,364, Long-term prepaid expenses Deferred tax assets 375,255, ,255, Other non-current assets 48,606, ,999, Total Non-current Assets 4,987,966, ,815,526, Total Assets 42,657,819, ,339,007, Current Liabilities: Short-term borrowings 2,587,109, ,291, Loans from the central bank Customer deposits and deposits from banks and other financial institutions Taking from banks and other financial institutions Financial liabilities at fair value through profit or loss 61,897, ,789, Derivative financial liabilities Notes payable 615,155, ,804, Accounts payable 5,068,476, ,008,335, Receipts in advance 574,994, ,691, Financial assets sold under repurchase agreements 17

18 Fees and commissions payable Payroll payable 321,750, ,084,529, Taxes payable 1,217,229, ,205,675, Interests payable Dividends payable 11,709, ,105, Other payables 379,088, ,033,169, Amounts payable under reinsurance contracts Insurance contract reserves Funds from securities trading agency Funds from underwriting securities agency Liabilities classified as held for sale Non-current liabilities due within one year 15,340, Other current liabilities 964,716, ,177, Total Current Liabilities 11,802,127, ,115,909, Non-current Liabilities: Long-term borrowings 1,844,041, ,722,207, Bonds payable 2,948,840, ,954,449, Including: Preferred share Perpetual bond Long-term payables 7,000, ,000, Long-term employee benefits payable Special payables Provisions 42,391, ,933, Deferred income 13,571, ,833, Deferred tax liabilities Other non-current liabilities Total non-current liabilities 4,855,843, ,736,424, Total liabilities 16,657,971, ,852,333, OWNERS EQUITY Share capital 6,155,033, ,102,706, Other equity instruments 18

19 Including: Preferred share Perpetual debt Capital reserves 1,701,969, ,045,440, Less: Treasury stock 964,716, ,177, Other comprehensive income -37,431, ,230, Special reserves Surplus reserve 2,615,437, ,615,437, General risk reserve Retained profits 16,332,953, ,866,457, Total owners' equity attributable to owner of the Company 25,803,247, ,288,634, Minority interests 196,600, ,039, Total owners' equity 25,999,847, ,486,673, Total liabilities and owners' equity 42,657,819, ,339,007, Legal Representative: Chen Zongnian Person in Charge of the Accounting Organization: Jin Yan Chief Accountant: Jin Yan 2. Parent company balance sheet Unit: RMB Item Closing balance Opening balance Current Assets: Cash and bank balances 13,539,690, ,249,118, Financial assets at fair value through profit or loss 4,423, ,284, Derivative financial assets Notes receivable 173,616, ,542, Accounts receivable 11,738,602, ,128,753, Prepayments 2,094, ,256, Interests receivable Dividends receivable Other receivables 986,502, ,963, Inventories 587,011, ,168, Assets classified as held for sale Non-current assets due within one year Other current assets 526,891, ,889,519,

20 Total Current Assets 27,558,831, ,486,606, Non-current Assets: Available-for-sale financial assets 283,221, ,221, Held-to-maturity investments Long-term receivables 65,384, ,153, Long-term equity investment 2,618,511, ,714,688, Investment properties Fixed assets 1,708,363, ,720,579, Construction in progress 329,218, ,447, Materials for construction of fixed assets Disposal of fixed assets Bearer biological assets Oil and gas assets Intangible assets 128,925, ,566, Development expenditure Goodwill Long-term prepaid expenses Deferred tax assets 177,568, ,568, Other non-current assets 10,932, ,782, Total Non-Current Assets 5,322,127, ,359,009, Total Assets 32,880,958, ,845,616, Current Liabilities: Short-term borrowings 300,000, Financial liabilities at fair value through profit or loss 54,946, ,858, Derivative financial liabilities Notes payable Accounts payable 976,137, ,851, Receipts in advance 322,887, ,831, Payroll payable 312,256, ,701, Taxes payable 1,099,809, ,754, Interests payable Dividends payable 11,709, ,105, Other payables 762,845, ,861,

21 Liabilities classified as held for sale Non-current liabilities due within one year Other current liabilities 964,716, ,177, Total Current Liabilities 4,805,307, ,350,142, Non-Current Liabilities: Long-term borrowings Bonds payable 2,948,840, ,954,449, Including: Preferred share Long-term payables Perpetual bond Long-term employee benefits payable Special payables Provisions 28,799, ,799, Deferred income Deferred tax liabilities Other non-current liabilities Total non-current liabilities 2,977,639, ,983,249, Total liabilities 7,782,947, ,333,392, Owners' equity Share capital 6,155,033, ,102,706, Other equity instruments Including: Preferred share Perpetual bond Capital reserves 1,613,479, ,687, Less: Treasury share 964,716, ,177, Other comprehensive income Special reserves Surplus reserve 2,615,437, ,615,437, Retained profits 15,678,776, ,138,569, Total owners' equity 25,098,011, ,512,224, Total liabilities and owners' equity 32,880,958, ,845,616, Legal Representative: Chen Zongnian Person in Charge of the Accounting Organization: Jin Yan Chief Accountant: Jin Yan 21

22 3. Consolidated income statement Item Amount for the current period Amount for the prior period Unit: RMB I. Total operating income 7,043,724, ,199,710, Including: Operating income 7,043,724, ,199,710, Interest income Premiums earned Fee and commission income II. Total operating costs 5,626,271, ,140,732, Including: Operating cost 4,030,635, ,023,844, Interest expense Fee and commission expenses Surrenders Claims and policyholder benefits (net of amounts recoverable from reinsurers) Changes in insurance contract reserves (net of reinsurers share) Insurance policyholder dividends Expenses for reinsurance accepted Business taxes and levies 66,178, ,522, Selling expenses 700,619, ,294, Administrative expenses 747,817, ,661, Financial expense 21,619, ,047, Impairment losses of assets 59,401, ,456, Add: Gains from changes in fair values (Losses are indicated by "-") Investment income (Loss is indicated by "-") 4,304, ,978, ,616, ,185, Including: Income from investments in associates and joint ventures Foreign exchange gains (Losses are indicated by - ) III. Operating profit (Loss is indicated by "-") 1,448,373, ,060,184, Add: Non-operating income 351,393, ,421,

23 Including: Gains from disposal of non-current assets 12, , Less: Non-operating expenses 895, ,165, Including: Losses from disposal of non-current assets IV. Total profit (total losses expressed with "-") 127, , ,798,871, ,384,440, Less: Income tax expenses 318,461, ,921, V. Net profit (net loss expressed with "-") 1,480,409, ,140,518, Net profit attributable to owners of parent company Profit or loss attributable to minority interests VI. Other comprehensive income, net of income tax Other comprehensive income attributable to owners of the Company, net of tax (I) Items that will not be reclassified subsequently to profit or loss 1. Changes in net liabilities or assets of remeasurement of defined benefit obligation 2. Amounts of other comprehensive income attributes to investees that cannot be reclassified into profit or loss under equity method (II) Other comprehensive income to be reclassified to profit or loss in subsequent periods 1. Amounts of other comprehensive income attributes to investees that are to be reclassified into profit or loss under equity method 2. Fair values gain or losses on available-for-sale financial assets 3. Gains or losses through held-to-maturity being reclassified to available-for-sale financial assets 4.The effective part of the cash flow hedging gains and losses 5. Exchange differences arising on conversion of financial statements denominated in foreign currencies 1,480,816, ,143,615, , ,097, ,767, ,013, ,799, ,798, ,799, ,798, ,799, ,798, Others Other comprehensive income attributable to minority interests, net of tax -1,031, ,784,

24 VII. Total comprehensive income 1,483,177, ,137,504, Total comprehensive income attributable to owners of the parent company Total comprehensive income attributable to minority interests 1,484,616, ,136,817, ,438, , VIII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal Representative: Chen Zongnian Person in Charge of the Accounting Organization: Jin Yan Chief Accountant: Jin Yan 4. Parent company income statement Unit: RMB Item Amount for the current period Amount for the prior period I. Total operating income 3,314,431, ,275,563, Less: Operating Cost 1,013,396, ,115,698, Business taxes and levies 41,140, ,752, Selling expenses 339,660, ,190, Administrative expenses 479,098, ,721, Financial expense -23,589, ,765, Impairment losses of assets Add: Gains from changes in fair values (Losses are indicated by "-") Investment income (Loss is indicated by "-") Including: Income from investments in associates and joint ventures II. Operating profit (Loss is indicated by "-") 3,049, ,021, ,489, ,483,796, ,436,455, Add: Non-operating income 327,927, ,687, Including: Gains from disposal of non-current assets 12, , Less: Non-operating expenses 491, ,423, Including: Losses from disposal of non-current assets III. Total profit (Total loss is indicated by "-") 113, , ,811,232, ,742,719, Less: Income tax expenses 256,704, ,704,

25 IV. Net profit (Net loss is indicated by "-") 1,554,528, ,501,014, V. Other comprehensive income, net of income tax (I) Items that will not be reclassified subsequently to profit or loss not to be reclassified to profit or loss in subsequent periods 1. Changes in net liabilities or assets of remeasurement of defined benefit obligation 2. Amounts of other comprehensive income attributes to investees that cannot be reclassified into profit or loss under equity method (II) Other comprehensive income to be reclassified to profit or loss in subsequent periods 1. Amounts of other comprehensive income attributes to investees that are to be reclassified into profit or loss under equity method 2. Fair values gain or losses on available-for-sale financial assets 3. Gains or losses through held-to-maturity being reclassified to available-for-sale financial assets 4.The effective part of the cash flow hedging gains and losses 5. Exchange differences arising on translation of financial statements denominated in foreign currencies 6. Others VI. Total comprehensive income 1,554,528, ,501,014, VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal Representative: Chen Zongnian Person in Charge of the Accounting Organization: Jin Yan Chief Accountant: Jin Yan 25

26 5. Consolidated Cash Flow Statement Item Amount for the current period Amount for the prior period I. Cash flows from operating activities: Unit: RMB Cash received from sale of goods or rendering of services Net increase in customer deposits and deposits from banks and other financial institutions Net increase in borrowings from central bank Net increase in placements from other financial institutions Cash receipts from premiums under direct insurance contracts Net cash receipts from reinsurance business Net cash receipts from policyholders deposits and investment contract liabilities Net cash receipts from disposal of financial assets at fair value through profit or loss Cash received from interests, fees and commissions 6,909,207, ,485,822, Net increase in taking from banks Net increase in financial assets sold under repurchase arrangements Refund of tax and levies 780,612, ,616, Other cash received relating to operating activities Sub-total of cash inflows from operating activities Cash payments for goods purchased and services received Net increase in loans and advances to customers Net increase in balance with the central bank and due from banks and other financial institutions Cash payments for claims and policyholders' benefits under direct insurance contracts 66,237, ,980, ,756,057, ,230,419, ,882,506, ,585,834, Cash paid for interests, fees and 26

27 commissions Cash payment for insurance policy dividends Cash paid to and on behalf of employees 1,532,543, ,063,252, Payments of various types of taxes 795,821, ,402, Other cash paid relating to operating activities Sub-total of cash outflows from operating activities Net Cash Flow from Operating Activities II. Cash Flows from Investing Activities: Cash receipts from disposals and recovery of investments Cash receipts from investment income Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets Net cash receipts from disposals of subsidiaries and other business units Other cash received relating to investing activities Sub-total of cash inflows from investing activities Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets 579,837, ,041, ,790,710, ,662,531, ,034,652, ,432,111, ,370,000, ,573, ,107, ,082, , ,398,656, ,348, ,372, ,745, Cash paid to acquire investments 1,257,822, Net increase in pledged loans receivables Net cash payments for acquisitions of subsidiaries and other business units Other cash paid relating to investing activities Sub-total of cash outflows from investing activities Net Cash Flow from Investment Activities III. Cash flows from financing activities: Cash receipts from capital contributions 45,000, ,372, ,482,567, ,054,283, ,472,218, ,695,

28 Including: cash receipts from capital contributions from minority owners of subsidiaries 5,695, Cash receipts from borrowings 4,362,038, ,862,310, Cash receipts from bond issue 2,932,480, Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities Cash repayments of amounts borrowed Cash payments for distribution of dividends or profits or settlement of interest expenses Including: payments for distribution of dividends or profits to minority owners of subsidiaries Other cash payments relating to financing activities Sub-total of cash outflows from financing activities Net Cash Flow from Financing Activities IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents V. Net Increase in Cash and Cash Equivalents Add: Opening balance of Cash and Cash Equivalents VI. Closing Balance of Cash and Cash Equivalents 437,630, ,007, ,799,668, ,485,493, ,700,387, ,581,972, ,318, ,423, ,984, ,804, ,474,690, ,475,200, ,324,978, ,010,293, ,019, ,261, ,292,590, ,298, ,519,252, ,033,033, ,811,842, ,118,734, Legal Representative: Chen Zongnian Person in Charge of the Accounting Organization: Jin Yan Chief Accountant: Jin Yan 6. Parent Company Cash Flow Statement I. Cash Flows from Operating Activities:: Item Amount for the current period Amount for the prior period Unit: RMB Cash receipts from the sale of goods and the rendering of services 2,387,618, ,476,721,

29 Refund of tax and levies 316,965, ,969, Other cash receipts relating to operating activities Sub-total of cash inflows from operating activities Cash payments for goods acquired and services received Cash payments to and on behalf of employees 53,688, ,223, ,758,273, ,833,915, ,238, ,195, ,975, ,957, Payments of all types of taxes 505,480, ,133, Other cash payments relating to operating activities Sub-total of cash outflows from operating activities Net Cash Flow from Operating Activities 442,942, ,126, ,160,636, ,267,412, ,636, ,502, II. Cash Flows from Investing Activities: Cash receipts from disposals and recovery of investments Cash receipts from investment income Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets Net cash receipts from disposals of subsidiaries and other business units Other cash receipts relating to investing activities Sub-total of cash inflows from investing activities Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets Cash payments to acquire investments Net cash payments for acquisitions of subsidiaries and other business units Other cash payments relating to investing activities Sub-total of cash outflows from investing activities Net Cash Flow from Investment Activities 3,350,000, ,951, ,489, , , , ,698, ,602, ,989,302, ,332, ,114, ,209, ,260,000, ,000, ,000, ,110, ,916,101, ,549,224, ,257,310, ,440,077, ,882,977, III. Cash Flows from Financing Activities 29

30 Cash receipts from capital contributions Cash receipts from borrowings 300,000, ,450, Cash receipts from issue of bonds 2,932,480, Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities Cash repayments of amounts borrowed Cash payments for distribution of dividends or profits or settlement of interest expenses Other cash payments relating to financing activities Sub-total of cash outflows from financing activities Net Cash Flow from Financing Activities IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Beginning balance of cash and cash equivalents VI. Closing Balance of Cash and Cash Equivalents 517,107, ,000, ,451,037, ,215, ,637, ,337, ,859, ,637, ,411, ,362, ,860,626, ,504, ,301, ,290,572, ,452, ,245,969, ,548,073, ,536,541, ,096,526, Legal Representative: Chen Zongnian Person in Charge of the Accounting Organization: Jin Yan Chief Accountant: Jin Yan 30

31 5.2 Audit Report Whether audit has been performed on this interim financial report Yes No The Company s 2017 Quarter 1 report has not been audited Note: This document is a translated version of the Chinese 2017 Quarter 1 Financial Report ( 2017 年度第一季度报告 ), and the published announcements in the Chinese version shall prevail. The complete published Chinese 2017 Quarter 1 Financial Report document may be obtained at HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD. Chairman: Chen Zongnian April 14 th,